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© 2013 TELEKOM SLOVENIJE GROUP
EU DIGITAL AGENDA FOR SLOVENIA
Optimal model for DAE broadband
targets fulfillment in rural areas of Slovenia
Vitel, 27th Maj 2013
Matjaž Pogačnik, MBA
Telekom Slovenije
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
SHORT FACTS ABOUT SLOVENIA
• Area: 20.273 km²
• Population: 2.050.189
• Settlements: 6.030
• Cities over 10.000: 16 (2 over 50.000)
• No. of households: 813.531
• BB fix access: 69% HH *
* Source: APEK
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
TELEKOM SLOVENIJE GROUPTelekom Slovenije, d.d.
M-Pay, d.o.o. 50 %M-Pay, d.o.o. 50 %
GVO, d.o.o. 100 %GVO, d.o.o. 100 %
AVTENTA.SI, d.o.o 100 %AVTENTA.SI, d.o.o 100 %
TSmedia, d.o.o. 100 %TSmedia, d.o.o. 100 %
POGODAK TRAŽILICA d.o.o. u likvidaciji (Hrvaška) 100 %
POGODAK DOO BEOGRAD – u likvidaciji (Srbija) 100 %
IPKO Telecommunications d.o.o. (Kosovo) 93,11 %IPKO Telecommunications d.o.o. (Kosovo) 93,11 %
Ipko Net Albania, d.o.o. 100 %
Media Works, d.o.o. 100 %
DSN, d.o.o. 50 %
ANEKS d.o.o. Banja Luka (BiH, Republika Srpska) 70 %ANEKS d.o.o. Banja Luka (BiH, Republika Srpska) 70 %
Gibtelecom Limited (Gibraltar) 50 %Gibtelecom Limited (Gibraltar) 50 %
SIOL d.o.o. (Hrvaška) 100 %SIOL d.o.o. (Hrvaška) 100 %
SIOL B.V. in liquidation (Nizozemska) 100 %SIOL B.V. in liquidation (Nizozemska) 100 %
ONE DOO Skopje (Makedonija) 46,01 %
PRIMO Communications d.o.o. (Albanija) 75 %PRIMO Communications d.o.o. (Albanija) 75 %
DIGI PLUS MUTIMEDIA DOOEL Skopje (Makedonija) 100 %DIGI PLUS MUTIMEDIA DOOEL Skopje (Makedonija) 100 %
ONE DOO Skopje (Makedonija) 53,99 %ONE DOO Skopje (Makedonija) 53,99 %
SOLINE, d.o.o. 100 %SOLINE, d.o.o. 100 %
SIOL d.o.o. Podgorica (Črna gora) 100 %SIOL d.o.o. Podgorica (Črna gora) 100 %
SIOL d.o.o. Sarajevo (Bosna in Hercegovina) 100 %SIOL d.o.o. Sarajevo (Bosna in Hercegovina) 100 %
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
TELEKOM SLOVENIJE GROUP
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
STRONG INFRASTRUCTURE COMPETITION
4th Q 2012 situation
• BB market share of TS is ~38,5 % (from 100% in 2004)• Market share per technology:
– 51,7% DSL (62,2% TS)– 28,6% Cable (2,2% TS)– 17,3% FTTH (36,8% TS)
• Cable operators going for FTTH implementation• TS has 36,8% FTTH market share
BSA and LLU imposed on all Cu and FTTH infrastructure
FTTH in Slovenia: Telekom Slovenije is a follower
4.677 6.75720.214
37.325
54.358 62.50064.584 73.524 79.905
85.627
89.505
0 316 4.282 10.35519.871
23.977 25.919 30.687 32.265 32505
32.906
0
50.000
100.000
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
2009Q1
2009Q2
2009Q3
2009Q4
2010Q1
2010Q2
2010Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
RS
38,5%
17,4%13,8%
11,7%
14,3%
Market share fixed BB access
Telekom Slovenije
T-2
Telemach
Amis
Rotovž
Tušmobil
Others
Source: APEK, 2013
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
THE GOALS OF THE DIGITAL AGENDA
• 2013:
- All Europeans have access to broadband connection
• 2020:
- All Europeans have at least 30 Mbit/s connection to internet
- 50% of households use at least 100 Mbit/s connection to internet
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
The current status of 30 Mbit/s connections in Slovenia
TS network and OAN
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
The current status of 100 Mbit/s connections in Slovenia
TS network and OAN
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Possibility of achieving the goals of DAE in Slovenia based on current BB situation
• 50% of households use at least 100 Mbit/s connection
to internet Due to well developed TS fiber network in urban areas, as well as other
alternative operators and cable suppliers, this aim is likely to be achieved
by 2020.
• All Europeans have at least 30 Mbit/s connection to
internetDue to lack of commercial interest in the construction of broadband
networks in rural and suburban areas, this goal cannot be reached without
a clear state strategy and public investment
A major challenge for the country!
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
The current BB situation in rural and suburban areas
• 97 % of Slovenian territory is rural and suburban• 81 % rural (73% of settlements, 23% of households)
• 16 % suburban (24% of settlements, 29% of households)
• 3 % is urban (3% of settlements, 48% of households)
• 418 700 (52%) of 814 000 households* are located in rural
and suburban areas
• Current state of copper TS fixed network (length of LL)
tehcnichally not possible 260 000 households (62%) in
suburban and rural areas to get 30 Mbit/s connection (Digital
Agenda) at the moment* Source: Statistical Office of Slovenia
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
How has Slovenia been solving this issue until now?
• In rural and most suburban areas there is no
commercial interest for the construction of broadband
networksThe reasons are extremely low population density and difficult terrain
• Co-financing the deployment of broadband network
with public funds OAN (Open Access Network) - project of constructing an open broadband
network of electronic communications in local communities:
the first tender in 2007, the second in 2011, technology neutral, BB
connections of at least 2 Mbit/s.
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Results of OAN projects
• Public Investment: EUR 82 million
• The result: 29.000 planned connections
• Building local, disconnected, mostly fiber optic networks
• Operators do not have clear obligations regarding access to the network, service quality, response times, the information system
• High entry barriers for network and service providers - in most cases setting up their own equipment
• In some cases access for other operators is not technically possible (eg GPON solutions)
• Construction of a parallel network to the existing copper network of TS
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Possible technical solutions to achieve the goal of DAE - 30 Mbit/s for all
• FTTx - adequate the implementation of P2P FTTH
• FTTH (P2P, xPON)
• FTTN, FTTC
• VDSL2 - adequate (FL and FTTx)
• MMDS - today's systems are not adequate due to splitting capacity
• Satellite systems - potentially adequate
• WiFi - limited adequacy - a shared capacity, QoS
• Cable Coax – DOCSIS - limited adequacy - depending on the topology
• Mobile (LTE 800 MHz) - suitable for sparsely populated areas with sufficient
density of BS
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Optimal solution for achieving DAE goals:
• Feasibility study analysed all technical solutions in sense of :• possibility of access at all levels,
• equal treatment and
• costs per BB connection.
• Optimal technical solution: A combination of FTTN, FTTH, LTE.
Assuring technological neutrality, implementation depends on the optimal
reuse of existing infrastructure at the lowest price, speed of construction.
• Low price solution: Reuse and upgrade of existing TS network in areas
without commercial interest for construction.
• Quick and accurate solution: Comprehensive BB problem solving on
national/regional level, open access, equal treatment under regulated
conditions, service / infrastructure / retail competition, the same wholesale
price across entire territory of Slovenia.
• Avoidance of main bottlenecks of current approach: high price, individual
problem solving, restricted access solutions for infrastructure operators.
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Detailed optimal technical solution
• FTTN: By re-using the existing infrastructure and shortening the
copper local loop to 1km we can build almost 40% of missing DA
connections.
• FTTH: Solution for areas with acceptable dispersion of population
FTTH resolves too long copper loops. Re-use of existing backhaul
fiber network and access fiber infrastructure is taken into account.
• LTE at 800 MHz: Open base station principle, suitable for
geographical areas with lowest population density, limited / shared
bandwidth.
BEST OF EACH APPROACH!
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
FTTN, FTTH and LTE using the same (existing) infrastructure of TS
• Starting point: Re-use of
existing network
• The individual household
addresses and accurate
infrastructure data have been
taken into account in the
analysis.
• Already existing infrastructure
is used for FTTN, FTTH and
LTE backhaul.
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
The level of investment in the optimal technical solution - a combination of FTTN, FTTH and LTE
• 260.000 connections need to be built.
• Estimated optimal investment to achieve 100 % coverage of households with 30 Mbit/s is 470 million €.
•Average cost per connection is 1.800 €.
number of
connections
CAPEX in
EUR
The total number of
connections /
average Capex
(weighted value) 260.000 1.800 €
The estimated
investment 470 MIO €
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Comparing the OAN investment and suggested solutions
• The investment into TS network upgrade is more than 50% lower than existing OANapproach(combined public and private part).
• With the same amount of public funds, 2.3 times more broadband connections can be built by re-using network of TS.
• Technological solution that guarantees speed, open access to infrastructure, equal treatment, increasing competition.
CAPEX in EUR
Upgrading the
network of TS
(with no active
equipment)
OAN
investment
Capex / connection
(weighted value) 1.800 € 4.200 €
The estimated
investment 470 MIO € 1.092 MIO €
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
FTTN technical solution taking into account the use of new technology - vectoring
• Without vectoring solution:
– halving the coverage – doubling the number of FTTN– 50% greater investment in FTTN
•Precondition to use vectoring is the removal of SLU obligations where FTTN is implementing
•Operators use connections with BRO model from FTTN or LLU from CO
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Vectoring: „alien“ cross-talk has significant impact
• A vector control entity has control of the individual line entities that
implement the vectoring technology on each pair
• Vectoring can be achieved for downstream or upstream or both flows on each
line
• Maximum performance is achieved when all lines in a cable group are
managed; below 90%impact reduced dramatically by the non controlled
„alien“ cross-talkers
1000m
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Telekom Slovenije solution also affects to achievement of the 100Mbit/s goal:„50% of households use at least 100 Mbit/s“
Possibility of 100 Mbit/s broadband speed
will be achieved for approximately 120.000
connections (15% of all households)– 20.000 households (20% of FTTN solution) short
local loops with vectoring
That substantially increase chance to reach
100Mbit/s goal:
„50% of households use at least 100 Mbit/s“
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Results of the analysis of financing possibilities
• Building a network with TS’s own resources
� No return of investment in the observed period of 50 years.
• The only feasible option for reaching the goals of DAE by upgrading TS’s
network is partial financing with public funds.
• Available sources of funds:
• Directly from EU - an instrument of Europe integrations (CEF: Connected
Europe Facility)
• Structural Funds - National tenders: Financial Perspective 2014-2020
• Private funds - Telekom Slovenije has the capability of private investment.
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
What can Telekom Slovenije offer
• Solution on State level (economy of scale of building a broadband network in a
larger area is better than in small municipalities).
• Keeping best practice from previous OAN tender national level planning,
priorities setting
• Eliminating previous OAN tender problems such access, communication,
network development, IT support, management (obligations on relevant markets 4
and 5).
• Significantly lower investment compared to the previous way of OAN
financing (at least 50%).
• Speed and quality of construction.
• Long-standing experience assure the quality of managing and maintaining.
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Conclusions• The Digital Agenda Europe is a big challenge and opportunity for Slovenia
• Slovenia is small and mainly rural country, practically no commercial interest onthe rural areas
• The majority of households’ in rural areas are connected to TS copper network.
• Result of Feasibility Study: neutral, technologically and economically optimalsolution, is re-use of TS network with combination of different technologies -FTTN, FTTH and LTE (open base stations).
• Upgrading current TS network would mean equal treatment, equal conditions foraccess to the network at all levels to all players.
• The price of upgrading TS network would be 470 MIO EUR, with average priceper BB connection 1.800 EUR (vs 4.200 EUR).
• Partial public funding is required
• The goals are achievable in the case of a State level solution
• Appropriate legislative and regulatory environment is required
Telekom Slovenije proposal can resolve digital divide
between urban and rural areas
EU DIGITAL AGENDA FOR SLOVENIA
© 2013 TELEKOM SLOVENIJE GROUP
Thanks for your attention!
Questions?
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